This previous post by Noah is one I keep thinking about more than most...especially the history of electricity adoption which I wasn't familiar with.
In my job, we deal with construction plans and it took 25+ years, after it was possible, for whole industry to go completely electronic. Engineers were still Fed Ex paper plans 10 years ago.
I think the medical/health care industry is another example of taking forever to get digitally efficient due to privacy, older staff resisting change, costs of changing systems etc.
Even when the tech already exists, the lag of it taking over can take so long in some sectors.
A really interesting and novel take. It feels intuitively right but I'm gonna devil's advocate it anyway.
WFH: my feeling is that this doesn't necessarily increase productivity so much as increase the variability in it. I've been WFH (software dev) for nearly a decade now and they've been some of my most productive years, as acknowledged even by my management. So I was naturally pretty positive towards it and felt strongly like it's got the great benefits described in the article.
COVID has changed my views on this quite heavily. I keep meeting people who "work" from home but will happily admit they hardly do any work and are scamming their own employers. They'll work a few hours a day and spend the rest of the day watching Netflix, sleeping, etc. Others work two jobs. Others set up and run their own company on their employer's time. The frequency with which I encounter this behavior without even looking for it, and the total lack of shame that goes with admitting to it, makes me think that there are good reasons why executives try to force everyone back to the office. For those of us lucky enough to enjoy our work we'd be doing it anyway so WFH feels like a pure productivity bonus. But for the clear majority, work is just work, it's not enjoyable and if not closely supervised they'll slack off.
All this makes me think that WFH will lead to a noticeable drop in productivity, and the execs are probably right to try and fight it. Yes people who are naturally productive and happy at work may get an hour or two more per day (best case, lots of people don't have commutes that long). But you'd need a whole team of them to offset the loss of productivity of just one person who phones it in and then spends most of the day checked out on the sofa.
The other thing on my mind is wondering how really this productivity is calculated, and how robust that calculation is. WFH fraud happens because companies struggle to understand the output and productivity potential of their employees. How can economists measure this so accurately when institutions seem to find it so hard? Noah mentions surveys asking people how much they work, but there's also the output side to consider. We're sort of taking it as read that the productivity problem is with how people use new tech, rather than something wrong with the measurement. I mean, I for sure feel like I'm more productive because of computers - my job wouldn't exist at all without them! That's like an infinite productivity boost, right? Well they can't actually sum it that way, so how does it count?
The idea that American towns/cities are going to either try to attract workers or plan for more services implies they tried to plan for how anything currently works, which seems kind of wildly optimistic. American city planning is mostly about actively hurting yourself via NIMBYism in hopes it'll stop anyone else from moving in. Can't even have a corner store in your R1 neighborhood.
There will be even more pressure on larger housing due to this though, because extra bedrooms can be used for home offices. And if you work from home, you've now found a way to use your home much more productively - speaking of NIMBYism, residential zoning was literally invented to stop immigrants from becoming richer by being able to do this. But home programmers are a little harder to ban than home Chinese laundry services.
---Medicare for all: do away with thousands of government subsidy programs (Ie Medicaid, Obamacare, etc., maybe even Workman's Comp medical portion) and eliminate a workforce of paper pushers in the private insurance industry. Plus making it all cheaper.
---Modernize the tax code, simplify, eliminate loopholes for the rich.
---Emphasize train for freight instead of trucking which is tearing up our roads without a commensurate gas tax to compensate.
---Get corporate America out of Washington and take the current crop of Congress with them (yeah I know, good luck, lol).
As a software developer, designer, and architect, I've lived online longer than most. Online productivity increases come from several directions. The most basic is the elimination of commute time. My gut feeling is the pandemic moved us 60% of the way to its potential benefit.
Another area is instant information access. This is much harder to assess because it depends on individual habits. Folks complain about the distraction of the network, but a disciplined person looking stuff up instead of relying on vague and faulty memory is much more productive.
A third area is refactoring work. Many delegation decisions used to be based on who was in physical proximity. A shift to who is most prepared to execute increases productivity.
Yet another vector is the more rapid dissemination of expertise.
Other areas in which the diminution of the necessity of physical proximity makes more efficient exist, perhaps as yet unnoticed.
These are complex and slow-moving phenomena that will take time to become significant.
1. The gig economy is anathema to governments that exist to take your money. Independents (not talking about employees at home) are likely to have many side gigs and to be paid in a variety of ways. In almost every blue jurisdiction, the move is insistent to make these otherwise newly productive folks just like employees with union bosses to waste money, dead time that cannot be used for anything, work to rules, and all the rest. This will give a substantial advantage to the red states in moving down this curve. People abandon California, Illinois and New York for just these reasons.
2. I have spent my life in healthcare IT -- In fact I wrote perhaps the first paper on this subject as the lead article for Science (at their request) in 1980. (Yes, it is that old, sadly.) There are a number of health-specific issues that impact the woeful lack of progress in this space. At some point I will write extensively about this -- it deserves its own long-form piece. But most fundamentally, financial systems took 50 years to really fall into place -- and those systems have exactly ONE data type (The dollar or some equivalent) and everyone agrees on what it is. In health care there are thousands of data types and it is unusual for any two people to agree on what they are. (Unless they just force compliance/lying as was done with the covid disaster.)
The IT solutions in healthcare are virtually all still billing-system centric (even if they say otherwise). Most individuals have many disparate providers of care, each with their own mental view of what an individual constitutes. NONE of the systems in popular use are able to reconcile these -- the solution is to just sort and dump the data for doctors and nurses and other health care professionals to figure out, over and over, for each patient every time. Most of the IT has just increased the stack of things through which one is supposed to sort and process, without impacting the effectiveness of the process at all because the underlying systems do not UNDERSTAND the data and therefor cannot be largely assistive.
Health care automation has gone virtually nowhere in the past 50 years. There are still fundamental issues that are woefully ignored (they are hard -- at the edge of Description Logics ability to handle). So as a betting man, I would not be looking to that sector for at least another 25 years for any automation to make a meaningful difference in either efficacy, quality, or efficiency.
“Remote work could allow companies to distribute their workforces to low-cost locations”. Great , meet the new outsourcing boss, same as the old outsourcing boss. It’s marvellous that having exported manufacturing until recently, the capitalist classes now want ti export whatever services they can. Good for productivity, bad for wages in rich countries. Same old story.
Today 1/15/22 the WSJ has a fine article updating 3D printing adoption and advances. Sounds like a lot has happened many with implications for on-shoring, speeding prototype production of complex parts with a sand deposition technique, provisioning out of stock or rare parts and more. One can almost imagine a 3D printer on an aircraft carrier repairing fighter plane parts, and all kinds of plumbing without going into port or at least greatly speeding turnaround and battle readiness.
The 20s may bring more than internet based productivity gains.
On remote work -- one of the challenges of remote work is to balance individual interests with that of the larger organization. In a world where work often involves collaboration across organizational boundaries a certain amount of physical face to face contact is needed to build trust. Remote work can save companies money in terms of office space, computers (byo) and save employees money in terms of commute and where they live. I would add that in the arly 2000s I worked in Southern California while my boss worked in Texas. During that time he would usually find a reason for me to fly out to Texas at least one week/month). So travel costs need to be added into the mix.
I remember when the original came up, it was a time of great optimism. Three years later, the pandemic, inflation, and the wars seemed to have sapped most of that optimism... but I still think that you were right, Noah, and we might just have a roaring 20s after all
If there weren't a catastrophe brewing for industrial civilisation and human survival, this'd be great. Maybe the shift needs to be to support a different direction.
This previous post by Noah is one I keep thinking about more than most...especially the history of electricity adoption which I wasn't familiar with.
In my job, we deal with construction plans and it took 25+ years, after it was possible, for whole industry to go completely electronic. Engineers were still Fed Ex paper plans 10 years ago.
I think the medical/health care industry is another example of taking forever to get digitally efficient due to privacy, older staff resisting change, costs of changing systems etc.
Even when the tech already exists, the lag of it taking over can take so long in some sectors.
A really interesting and novel take. It feels intuitively right but I'm gonna devil's advocate it anyway.
WFH: my feeling is that this doesn't necessarily increase productivity so much as increase the variability in it. I've been WFH (software dev) for nearly a decade now and they've been some of my most productive years, as acknowledged even by my management. So I was naturally pretty positive towards it and felt strongly like it's got the great benefits described in the article.
COVID has changed my views on this quite heavily. I keep meeting people who "work" from home but will happily admit they hardly do any work and are scamming their own employers. They'll work a few hours a day and spend the rest of the day watching Netflix, sleeping, etc. Others work two jobs. Others set up and run their own company on their employer's time. The frequency with which I encounter this behavior without even looking for it, and the total lack of shame that goes with admitting to it, makes me think that there are good reasons why executives try to force everyone back to the office. For those of us lucky enough to enjoy our work we'd be doing it anyway so WFH feels like a pure productivity bonus. But for the clear majority, work is just work, it's not enjoyable and if not closely supervised they'll slack off.
All this makes me think that WFH will lead to a noticeable drop in productivity, and the execs are probably right to try and fight it. Yes people who are naturally productive and happy at work may get an hour or two more per day (best case, lots of people don't have commutes that long). But you'd need a whole team of them to offset the loss of productivity of just one person who phones it in and then spends most of the day checked out on the sofa.
The other thing on my mind is wondering how really this productivity is calculated, and how robust that calculation is. WFH fraud happens because companies struggle to understand the output and productivity potential of their employees. How can economists measure this so accurately when institutions seem to find it so hard? Noah mentions surveys asking people how much they work, but there's also the output side to consider. We're sort of taking it as read that the productivity problem is with how people use new tech, rather than something wrong with the measurement. I mean, I for sure feel like I'm more productive because of computers - my job wouldn't exist at all without them! That's like an infinite productivity boost, right? Well they can't actually sum it that way, so how does it count?
"Economist Paul Krugman wrote that by 2005, it would become clear that the Internet's effect on the economy is no greater than the fax machine's."
See https://www.snopes.com/fact-check/paul-krugman-internets-effect-economy/
The idea that American towns/cities are going to either try to attract workers or plan for more services implies they tried to plan for how anything currently works, which seems kind of wildly optimistic. American city planning is mostly about actively hurting yourself via NIMBYism in hopes it'll stop anyone else from moving in. Can't even have a corner store in your R1 neighborhood.
There will be even more pressure on larger housing due to this though, because extra bedrooms can be used for home offices. And if you work from home, you've now found a way to use your home much more productively - speaking of NIMBYism, residential zoning was literally invented to stop immigrants from becoming richer by being able to do this. But home programmers are a little harder to ban than home Chinese laundry services.
Bigger productivity drivers to me would be:
---Medicare for all: do away with thousands of government subsidy programs (Ie Medicaid, Obamacare, etc., maybe even Workman's Comp medical portion) and eliminate a workforce of paper pushers in the private insurance industry. Plus making it all cheaper.
---Modernize the tax code, simplify, eliminate loopholes for the rich.
---Emphasize train for freight instead of trucking which is tearing up our roads without a commensurate gas tax to compensate.
---Get corporate America out of Washington and take the current crop of Congress with them (yeah I know, good luck, lol).
As a software developer, designer, and architect, I've lived online longer than most. Online productivity increases come from several directions. The most basic is the elimination of commute time. My gut feeling is the pandemic moved us 60% of the way to its potential benefit.
Another area is instant information access. This is much harder to assess because it depends on individual habits. Folks complain about the distraction of the network, but a disciplined person looking stuff up instead of relying on vague and faulty memory is much more productive.
A third area is refactoring work. Many delegation decisions used to be based on who was in physical proximity. A shift to who is most prepared to execute increases productivity.
Yet another vector is the more rapid dissemination of expertise.
Other areas in which the diminution of the necessity of physical proximity makes more efficient exist, perhaps as yet unnoticed.
These are complex and slow-moving phenomena that will take time to become significant.
Two elements of note:
1. The gig economy is anathema to governments that exist to take your money. Independents (not talking about employees at home) are likely to have many side gigs and to be paid in a variety of ways. In almost every blue jurisdiction, the move is insistent to make these otherwise newly productive folks just like employees with union bosses to waste money, dead time that cannot be used for anything, work to rules, and all the rest. This will give a substantial advantage to the red states in moving down this curve. People abandon California, Illinois and New York for just these reasons.
2. I have spent my life in healthcare IT -- In fact I wrote perhaps the first paper on this subject as the lead article for Science (at their request) in 1980. (Yes, it is that old, sadly.) There are a number of health-specific issues that impact the woeful lack of progress in this space. At some point I will write extensively about this -- it deserves its own long-form piece. But most fundamentally, financial systems took 50 years to really fall into place -- and those systems have exactly ONE data type (The dollar or some equivalent) and everyone agrees on what it is. In health care there are thousands of data types and it is unusual for any two people to agree on what they are. (Unless they just force compliance/lying as was done with the covid disaster.)
The IT solutions in healthcare are virtually all still billing-system centric (even if they say otherwise). Most individuals have many disparate providers of care, each with their own mental view of what an individual constitutes. NONE of the systems in popular use are able to reconcile these -- the solution is to just sort and dump the data for doctors and nurses and other health care professionals to figure out, over and over, for each patient every time. Most of the IT has just increased the stack of things through which one is supposed to sort and process, without impacting the effectiveness of the process at all because the underlying systems do not UNDERSTAND the data and therefor cannot be largely assistive.
Health care automation has gone virtually nowhere in the past 50 years. There are still fundamental issues that are woefully ignored (they are hard -- at the edge of Description Logics ability to handle). So as a betting man, I would not be looking to that sector for at least another 25 years for any automation to make a meaningful difference in either efficacy, quality, or efficiency.
“Remote work could allow companies to distribute their workforces to low-cost locations”. Great , meet the new outsourcing boss, same as the old outsourcing boss. It’s marvellous that having exported manufacturing until recently, the capitalist classes now want ti export whatever services they can. Good for productivity, bad for wages in rich countries. Same old story.
Today 1/15/22 the WSJ has a fine article updating 3D printing adoption and advances. Sounds like a lot has happened many with implications for on-shoring, speeding prototype production of complex parts with a sand deposition technique, provisioning out of stock or rare parts and more. One can almost imagine a 3D printer on an aircraft carrier repairing fighter plane parts, and all kinds of plumbing without going into port or at least greatly speeding turnaround and battle readiness.
The 20s may bring more than internet based productivity gains.
On remote work -- one of the challenges of remote work is to balance individual interests with that of the larger organization. In a world where work often involves collaboration across organizational boundaries a certain amount of physical face to face contact is needed to build trust. Remote work can save companies money in terms of office space, computers (byo) and save employees money in terms of commute and where they live. I would add that in the arly 2000s I worked in Southern California while my boss worked in Texas. During that time he would usually find a reason for me to fly out to Texas at least one week/month). So travel costs need to be added into the mix.
I remember when the original came up, it was a time of great optimism. Three years later, the pandemic, inflation, and the wars seemed to have sapped most of that optimism... but I still think that you were right, Noah, and we might just have a roaring 20s after all
I'm not sure if there really is a net productivity boost from WFH, but I think we will know more over time. Many CEOs seem to think there isn't one: https://www.google.com/search?q=back+to+the+office&source=lnms&tbm=nws
Hit the ball out of the park with this one.
If there weren't a catastrophe brewing for industrial civilisation and human survival, this'd be great. Maybe the shift needs to be to support a different direction.
https://www.scientificamerican.com/article/the-delusion-of-infinite-economic-growth/#
https://www.youtube.com/watch?v=YnEXEIp5vB8&ab_channel=CanadianAssociationfortheClubofRome
We see the Internet everywhere but in the productivity statistics.
More on McKinsey & Co.
https://ritholtz.com/2016/04/161250/